Wk 3 - Market Penetration Plan [due Mon] Top of Form Bottom of Form Assignment Content 1. Top of Form Resource: Marketing Penetration Plan Grading Guide Create a 700-word plan for market penetration of a 3-year period of time: · Explain the major components of your marketing plan. · Examine your distribution and pricing plans. · Explain your business purpose. · Explain your pricing strategy. · Evaluate which type of advertising is the most beneficial to your business/product. · Evaluate whether that type of advertising matches up to your offering and pricing, and whether you can afford it. · Explain whether it fits your image of your business. · Determine whether your customers will need to be educated about your business/product. · Explain whether you will need to hire a marketing expert. Format your assignment consistent with APA guidelines. Submit your assignment. Resources · Center for Writing Excellence · Reference and Citation Generator · Grammar and Writing Guides · Learning Team Toolkit Bottom of Form LESSON 8: Project Schedule Formatting Fundamentals LESSON SKILL MATRIX SKILLS TASKS Gantt Chart Formatting Modify the Gantt Chart using the Bar Styles dialog box Modify the Gantt Chart using Gantt Chart Styles Modifying Text Appearance in a View Modify the appearance of text in a view Modify the appearance of a single piece of text Creating Custom Fields Create a custom text field Creating and Editing Tables Create a custom table Creating Custom Views Create a custom view As a video production manager for Southridge Video and the project manager for the new Don Funk music video, you have the foundation of your project schedule in place. However, a project manager doesn’t usually look at all of the data in a project schedule at once. In this lesson, you will learn to use some of the tools in Microsoft Project 2013, such as views and reports, to look at the element or aspect of the project schedule in which you are currently interested. With these tools, you can significantly impact how your data appears by the way in which you change the data format to meet your needs. KEY TERMS Charts view custom field diagram view forms view sheets view usage view view SOFTWARE ORIENTATION: Microsoft Project’s Bar Styles Dialog Box In Microsoft Project, you can use the Bar Styles dialog box (see Figure 8-1) to customize the appearance of items on the Gantt Chart. This dialog box enables you to change the appearance of items such as task bars, milestones, summary bars, and text that appear on the Gantt Chart. You can change characteristics such as bar types, patterns, colors, splits, and shapes. Figure 8-1: Bar Styles dialog box You will now use one of the features of the ribbon interface in Project 2013, the Format ribbon. With this ribbon you have faster access to formatting options in views. You may have seen in the various views of previous lessons a tab at the very top of the screen, above the ribbon. This is the Format ribbon. This tab provide ...

1. Wk 3 - Market Penetration Plan [due Mon]
Top of Form
Bottom of Form
Assignment Content
1.
Top of Form
Resource: Marketing Penetration Plan Grading Guide
Create a 700-word plan for market penetration of a 3-year
period of time:
· Explain the major components of your marketing plan.
· Examine your distribution and pricing plans.
· Explain your business purpose.
· Explain your pricing strategy.
· Evaluate which type of advertising is the most beneficial to
your business/product.
· Evaluate whether that type of advertising matches up to your
offering and pricing, and whether you can afford it.
· Explain whether it fits your image of your business.
· Determine whether your customers will need to be educated
about your business/product.
· Explain whether you will need to hire a marketing expert.
Format your assignment consistent with APA guidelines.
Submit your assignment.
Resources
· Center for Writing Excellence
· Reference and Citation Generator
· Grammar and Writing Guides
· Learning Team Toolkit
Bottom of Form
LESSON 8: Project Schedule Formatting Fundamentals
LESSON SKILL MATRIX
SKILLS

2. TASKS
Gantt Chart Formatting
Modify the Gantt Chart using the Bar Styles dialog box
Modify the Gantt Chart using Gantt Chart Styles
Modifying Text Appearance in a View
Modify the appearance of text in a view
Modify the appearance of a single piece of text
Creating Custom Fields
Create a custom text field
Creating and Editing Tables
Create a custom table
Creating Custom Views
Create a custom view
As a video production manager for Southridge Video and the
project manager for the new Don Funk music video, you have
the foundation of your project schedule in place. However, a
project manager doesn’t usually look at all of the data in a
project schedule at once. In this lesson, you will learn to use
some of the tools in Microsoft Project 2013, such as views and
reports, to look at the element or aspect of the project schedule
in which you are currently interested. With these tools, you can
significantly impact how your data appears by the way in which
you change the data format to meet your needs.
KEY TERMS
Charts view
custom field
diagram view
forms view
sheets view
usage view
view
SOFTWARE ORIENTATION: Microsoft Project’s Bar Styles
Dialog Box
In Microsoft Project, you can use the Bar Styles dialog box
(see Figure 8-1) to customize the appearance of items on the

3. Gantt Chart. This dialog box enables you to change the
appearance of items such as task bars, milestones, summary
bars, and text that appear on the Gantt Chart. You can change
characteristics such as bar types, patterns, colors, splits, and
shapes.
Figure 8-1: Bar Styles dialog box
You will now use one of the features of the ribbon interface in
Project 2013, the Format ribbon. With this ribbon you have
faster access to formatting options in views. You may have seen
in the various views of previous lessons a tab at the very top of
the screen, above the ribbon. This is the Format ribbon. This tab
provides formatting options available in the view you are in at
the time. Figure 8-2 shows the Format ribbon for the Gantt
Chart view.
Figure 8-2: Format ribbon for Gantt Chart views
Gantt Chart Formatting
The Gantt Chart view consists of two parts: a table on the left
and a bar chart on the right. The default formatting of the Gantt
Chart view is useful for onscreen project schedule viewing and
printing. However, you are able to change the formatting of
almost any element on the Gantt Chart to suit your needs. In
this exercise, you will learn to format Gantt Chart task bars.
You can format whole categories of Gantt Chart task bars via
the Bar Styles dialog box, or you can format individual Gantt
Chart task bars directly.
Modifying the Gantt Chart Using the Bar Styles Dialog Box
In this exercise, you will modify several items on the Gantt
Chart using the Bar Styles dialog box.
MODIFY THE GANTT CHART USING THE BAR STYLES
DIALOG BOX
GET READY. Before you begin these steps, launch Microsoft
Project. OPEN the Don Funk Music Video 8M project schedule
from the data files for this lesson. SAVE the file as Don Funk

4. Music Video 8 in the solutions folder for this lesson as directed
by your instructor.
· 1. Click the Format tab, then in the Bar Styles group click
the down-arrow under the Format button. Select Bar Styles from
the dropdown list. The Bar Styles dialog box appears.
· 2. In the Name column, select Milestone. You want to change
the shape of the milestones on the Gantt Chart.
· 3. In the bottom half of the dialog box under the Start label,
locate the Shape box. Select the star shape from the dropdown
list in the Shape box. Note that the star shape now appears in
the Appearance column for Milestone. Your screen should look
similar to Figure 8-3.
Figure 8-3:Bar Styles dialog box displaying the star as the
shape for milestones
·
4. In the Name column at the top of the dialog box, select Task.
· 5. In the bottom half of the dialog box, click the Text tab. You
want to make a change to display the resource groups assigned
rather than full names next to the task bars.
· 6. In the Text tab, in the Right box, select Resource Names,
click the down-arrow, and then select Resource Group. Your
screen should look similar to Figure 8-4.
Figure 8-4:Bar Styles dialog box showing resource group to be
listed at the right of all task Gantt chart bars
· 7. Click OK to close the Bar Styles dialog box. Microsoft
Project applies the formatting changes you made to the Gantt
Chart.
· 8. Select the name cell of Task 27, Pre-Production complete.
Press Crtl+Shift+F5. This is the keyboard shortcut for Scroll to
Task. Microsoft Project scrolls the Gantt Chart bar view to task
27, where you can see the reformatted milestones and resource
groups rather than individual names. Your screen should look
similar to Figure 8-5.
Figure 8-5:Gantt Chart view showing resource groups and the

5. new shape for milestones
· 9.SAVE the project schedule.
PAUSE. LEAVE the project schedule open to use in the next
exercise.
TAKE NOTE*
With the Bar Styles dialog box, the formatting changes you
make to a type of item (a milestone, for example) apply to all
such items in the Gantt Chart.
You have just used the Bar Styles dialog box to make
formatting changes to several items in the Gantt Chart view. As
you learned in Lesson 1, the Gantt Chart is the primary way of
viewing the data in a project schedule. It became the standard
for visualizing project schedules in the early twentieth century
when American engineer and management consultant Henry L.
Gantt developed a bar chart with two main principles; 1) to
measure activities by the amount of time needed to complete
them; and 2) to represent the amount of the activity that should
have been done in a given time.
In Microsoft Project, the Gantt Chart view is the default view.
A view is a window through which you can see various elements
of your project schedule. The two main view categories are
named single view, which you have been using mostly
throughout the lessons, and one you will see later in this lesson
called a combination view. Views are made up of one or more
view elements. The five different view formats and their
common use are listed in Table 8-1.
Table 8-1: View elements
FORMAT
PURPOSE OR USE
Charts
Present information graphically, such as the Gantt Chart.
Sheets
Present information in rows and columns, such as the Task
Sheet or the Resource Sheet.
Forms
Present detailed information in a structured format about one

6. task or resource at a time, such as the Task Form.
Diagram
Present information in diagram format, such as the Network
Diagram.
Usage
Present task or resource information on the left side and time-
phased information on the right, such as the Resource Usage or
Task Usage views.
Modifying the Gantt Chart Using Gantt Chart Styles
In this exercise, you will create a custom Gantt Chart, format it
using predefined Gantt Chart Styles, and save the custom view.
MODIFY THE GANTT CHART USING GANTT CHART
STYLES
USE the project schedule you created in the previous exercise.
· 1. Click the Format tab, under Gantt Chart Tools, if necessary.
· 2. In the Show/Hide group, click the Project Summary Task
box.
· 3. Press the F5 key. In the ID box, type 0 and click OK.
Microsoft Project displays the project summary task (task ID 0)
at the top of the Gantt Chart view. Now you will make a few
adjustments to your screen so that all of the summary task
information is visible.
· 4. Drag the vertical divider bar between the table and chart to
the right until at least the Duration and Start columns are
visible, if necessary.
ANOTHER WAY
You can also double-click the divider bar to snap the divider to
the nearest column edge.
· 5.Double-click the right edge of the Task Name column, in the
column heading, to expand the column so that you can see the
entire value. Readjust the vertical divider bar, as necessary.
Your screen should look similar to Figure 8-6.
Figure 8-6:Gantt Chart showing widened Task Name column
and project summary task
Before you make further formatting changes, you will make a

7. copy of the Gantt Chart view so that you will not affect the
original Gantt Chart view.
ANOTHER WAY
Right-clicking anywhere in a column heading will activate the
sub-menu for column. Selecting Field Settings will display the
Field Settings dialog box. In the dialog box, click the Best Fit
button to automatically adjust the column width.
· 6. Click the View tab. In the Task Views group, click
the down-arrow under the Gantt Chart button then select Save
View. The Save View dialog box appears with View 1 as the
default name as in Figure 8-7.
Figure 8-7:Save View dialog box
· 7. In the Name Field, type My Custom Gantt Chart, and then
click OK. The Save View dialog box closes. Note that the name
of the new view is listed on the left edge of your screen. Your
screen should look similar to Figure 8-8.
· 8. Click the Format tab. In the Gantt Chart Styles group, click
the More button located at the lower right of the bar graphics,
as shown in Figure 8-9.
Figure 8-9:The More button displays predefined Gantt bar styles
· 9. The predefined Gantt Chart Style options appear as
in Figure 8-10. These are divided into two style categories, one
for scheduling and one for presentations. Select the second
style in the scheduling category.
Figure 8-10:Predefined Gantt Chart styles
· 10. On the Format ribbon, in the Bar Styles group, click
the check box for Critical Tasks.
· 11. Press the F5 key. In the ID box key 55 and press Enter.
Notice that most tasks from 52-78 are formatted to display in
red. Your screen should look similar to Figure 8-11.
Figure 8-11:My Custom Gantt Chart view with new scheduling
style applied and critical tasks
TAKE NOTE*

8. Notice that the Resource Groups are still displayed to the right
of the Gantt bars, but the Milestones have been changed back
the default diamond shape.
· 12.SAVE the project schedule.
PAUSE. LEAVE the project schedule open to use in the next
exercise.
In this exercise, you made formatting changes to your project
schedule using predefined Gantt Chart Styles. This is similar to
making changes using the Bar Styles command; however, the
predefined Gantt Chart Styles has fewer choices than the Bar
Styles command. As you are reviewing the formatting changes
in the My Custom Gantt Chart view, remember that none of the
data in the project schedule has changed – just the way it is
formatted. These formatting changes affect only the My Custom
Gantt Chart view; all other views in Microsoft Project are
unaffected.
Modifying Text Appearance In a View
Microsoft Project enables you to change the way text appears
within a view. You can modify the appearance of an entire
category of tasks, such as summary tasks or milestones, or you
can change the appearance of an individual cell. This feature
allows you to call attention to specific items or to offset a
specific type of task with color and font size or type.
MODIFY THE APPEARANCE OF TEXT IN A VIEW
USE the project schedule you created in the previous exercise.
· 1. Click the Task tab, click the down-arrow under the Gantt
Chart button and select More Views. The More Views dialog
box appears.
· 2. In the More Views box, select Task Sheet, and then
click Apply. The Detail Gantt view appears.
ANOTHER WAY
You can also right-click the view name bar at the left edge of
the screen and select More Views from the dropdown menu.
· 3. Press the F5 key. In the ID box, type 0 and then press Enter.

9. This brings you to the top of the Gantt Chart.
· 4. Click the Format tab under Text Sheet Tools. Then in the
Format group click Text Styles. The Text Styles dialog box
appears.
· 5. In the Items to Change: box, click the sub-menu arrow and
select Summary Tasks from the list
· 6. In the Font: box, leave the default font type as it is. In the
Font Style: box, select Bold Italic.
· 7. In the Size: box, select 12 as the font size.
· 8. In the Color: box, select White.
· 9. In the Background Color: box select dark blue (ScreenTip
will show as Blue, Darker 50%). Your Text Styles dialog box
will look similar to Figure 8-12.
Figure 8-12:Text Styles dialog box with summary task
formatting changes
· 10. Click OK. Microsoft Project changes the formatting of all
summary tasks to the attributes you specified. Your screen
should look similar to Figure 8-13.
·
Figure 8-13:Task Sheet view with summary tasks reformatted
TAKE NOTE*
Notice that the Project summary task was not reformatted. This
is because the Project Summary task is a separate category and
must be reformatted by itself.
· 11.SAVE the project schedule.
PAUSE. LEAVE the project schedule open to use in the next
exercise.
In this exercise, you modified the way all text appeared for
summary tasks. In the exercise you will modify a single piece of
text.
Modifying the Appearance of a Single Piece of Text
In this exercise, you will modify a single piece of text in the
Task Sheet view using the cost table.
MODIFY THE APPEARANCE OF A SINGLE PIECE OF TEXT
USE the project schedule you created in the previous exercise.

10. · 1. On the ribbon, click the View tab. In the Data group click
the Tables button and then select Cost.
· 2. Auto fit all the columns to see all the data. Select the Total
Cost cell for task 38, Scene 2.
TROUBLESHOOTING
The tables in Microsoft Project may look like Microsoft Excel
but there are distinct differences. For example, you can auto-fit
all columns in Excel at the same time, but you cannot in do this
in Microsoft Project.
· 3. Select the Task tab and then, in the Font group, click
the expand button at the lower-right corner of that group. The
Font dialog box appears.
· 4. Change the font color to Automatic and the background
color to yellow. Your screen should look similar to Figure 8-14.
Figure 8-14:Task Sheet view with Font dialog box changes
made
· 5. Click OK. Notice that only that cell has change font color
and background color.
· 6.SAVE the project schedule.
PAUSE. LEAVE the project schedule open to use in the next
exercise.
In this exercise, you modified a single piece of text. Modified
text will remain modified every time it is called up in that view,
regardless of the table you are using. For example, if you were
to switch to the summary table after you formatted this text, it
appears with the new formatting.
Creating Custom Fields
As you develop more information about your project tasks, you
may want to enter this information into the schedule, but find
there is no associated, default field available. With Microsoft
Project you have the ability to create custom, user-defined
fields to meet your needs. Custom fields are the starting point
for you to create customized tables, views and reports.
CREATE A CUSTOM TEXT FIELD
USE the project schedule you created in the previous exercise.

11. · 1. Click the Format tab. Then click on Custom Fields. The
Custom Fields dialog box appears as shown in Figure 8-15.
Figure 8-15:Custom Fields dialog box
· 2. Click once on the Text1 field and then click
the Rename button.
· 3. In the Rename Field dialog box, type Cast and then
press OK.
· 4. Click once on the Text2 field and then click
the Rename button.
· 5. In the Rename Field dialog box, type Location and then
press OK.
· 6. Click OK to close the Custom Fields dialog box.
SAVE and close the project schedule.
PAUSE. LEAVE Microsoft Project open to use in the next
exercise.
In this exercise, you created two custom text fields. A custom
field is a user-definable field. Text fields are available for you
to enter any type of text-based information. In this case study,
you used them to create a custom field for shooting location and
one which you can enter the cast members to be used.
In Microsoft Project’s task database there are 130 user-
definable fields available for you to use, broken down into nine
categories. Some fields lend themselves to be used in
calculations while others are for simply storing text-based
information. Table 8-2 displays all nine categories, their
primary purpose and use, the type of entry, number of fields
available in each, and in which database these fields can be
used.
Table 8-2: Custom Fields
CATEGORY
PURPOSE OR USE
ENTRY TYPE
NUMBER AVAILABLE

12. AVAILABLE DATABASE
Cost
Used to display cost-based information and will display in the
units selected in the options. Can be used as a variable in
calculations.
Calculated or Entered
10
All
Date
Used to display date-based information and will display in the
format chosen in the options. Can be used as a variable in
calculations.
Calculated or Entered
10
Al
Duration
Used to display duration-based information. Can be used as a
variable in calculations.
Calculated or Entered
10
All
Finish
Primarily used in the Interim Plan feature. Used to display date-
based information. Can be used as a variable in calculations.
Calculated or Entered
10
All
Flag
Used to set a flag (Yes/No) and will display a Yes or No. Can
be used as a conditional variable in calculations.
Calculated or Entered
20
All
Number
Used for numerical information not covered by another field.
Can be used as a variable in calculations.

13. Calculated or Entered
20
All
Start
Primarily used in the Interim Plan feature. Used to display date-
based information. Can be used as a variable in calculations.
Calculated or Entered
10
All
Text
Used for any type of text-based information. Certain values of
text can display based on a calculation.
Calculated or Entered
30
All
Outline Code
Used to define a structure for tasks or resources only (not used
for assignments).
Entered (static)
10
Task/Resource
Custom fields can make the difference between a mediocre
Microsoft Project schedule file and a great Microsoft Project
schedule file. When planning your project, ensure there is
justification to set up custom fields. In other words, collecting
and recording data simply because the option is available does
not mean it is necessarily a good idea. The data you collect and
record should add value.
Creating and Editing Tables
Within Microsoft Project are a number of different tables that
can be used in various views. These tables contain most of the
commonly used data fields. However, you can create new tables
that contain exactly the data you want, such as custom fields, or
you can modify any predefined table to meet your needs.
CREATE A CUSTOM TABLE

14. OPEN the Don Funk Music Video 8MA project schedule from
the data files for this lesson. SAVE the file as Don Funk Music
Video 8A in the solutions folder for this lesson as directed by
your instructor.
· 1. Click the View tab. Then click Tables and then click More
Tables. The More Tables dialog box appears and displays all of
the predefined tables available to you, depending on the type of
view currently displayed (task or resource).
· 2. Confirm that the Task button is selected as the Tables
option. Select Entry, and then click the Copy button. The Table
Definition dialog box appears.
· 3. In the Name box, key Music Video Schedule Table. Check
the check box to the right of the Name box labeled Show in
menu. Now you will customize the table.
· 4. In the Field Name column, select the following field names
and then click Delete Row after selecting each field name.
· Indicators
· Duration
· Finish
· Predecessors
· Resource Names
After you have deleted these fields, your screen should look
similar to Figure 8-16.
Figure 8-16:Table Definition dialog box
· 5. In the Field Name column, click the down-arrow in the next
empty cell below Start, and then type or select Cast
(Text1) from the dropdown list.
· 6. In the Align Data column in the same row, select Left. In
the Width column, type or select 50.
· 7. In the Field Name column in the next empty row below
Cast, select Location(Text 2) from the dropdown list.
· 8. In the Align Data column in the same row, select Left. In
the Width column, type or select 30.

15. · 9. In the Field Name column, select Start, and then click
the Cut Row button.
· 10. In the Field Name column, select Name, and then click
the Paste Row button.
· 11. In the Align Data column in the Start row, select Left. In
the Width column, type or select 30.
· 12. In the Align Data column in the Name row, select Left. In
the Width column, type or select 60.
· 13. In the Date Format box, select Wed 1/28/09 12:33 pm.
Your screen should look similar to Figure 8-17.
Figure 8-17:Table Definition dialog box with changes
· 14. Click OK to close the Table Definition dialog box. The
new table is highlighted in the More Tables dialog box.
· 15. Click Apply. Microsoft Project applies the new table to the
Task Sheet view. Your screen should look similar to Figure 8-
18.
Figure 8-18:Task Sheet with the Music Video Schedule table
applied
· 16.SAVE the project schedule.
PAUSE. LEAVE the project schedule open to use in the next
exercise.
In this exercise, you created a custom table to display the
information typically found on a video shooting schedule. You
modified an existing table to include additional data that was
important to your project schedule. As you create future project
schedules, keep in mind that you have three options when
setting up tables: you can create a new table, redefine an
existing table, or copy an existing table and modify it as
needed. Also note that as you modify any table, you are
changing the definition of that table.
Creating Custom Views
Almost all of the work you perform in Microsoft Project is done
in a view, which allows you to see your project schedule in a
useful way. Microsoft Project includes numerous predefined

16. views. You can use these views, edit an existing view, or create
your own view. In this exercise, you will create a custom view
using the custom filter and custom table you created in earlier
lessons.
CREATE A CUSTOM VIEW
USE the project schedule you created in the previous exercise.
· 1. On the View ribbon, click the down-arrow under the Gantt
Chart button in the Task Views group, then click More Views.
The More Views dialog box appears, displaying all of the
predefined views available to you.
· 2. Click the New button. The Define New View dialog box
appears. Most views use only a single pane, but a view can
consist of two separate panes.
· 3. Make sure Single View is selected, and then click OK. The
View Definition dialog box appears.
· 4. In the Name box, key Music Video Schedule View.
· 5. In the Screen box, select Task Sheet from the dropdown list.
· 6. In the Table box, select Music Video Schedule Table from
the dropdown list. The specific groups in the dropdown list
depend on the type of view you selected in step 5 (task or
resource).
· 7. In the Group box, select No Group from the dropdown list.
The specific groups in the dropdown list again depend on the
type of view you selected in step 5.
· 8. In the Filter box, select Unfinished Shoots from the
dropdown list. The specific groups in the dropdown list depend
on the type of view you selected in step 5. The View Definition
dialog box shows all the elements that can make up a view.
Your screen should look similar to Figure 8-19.
Figure 8-19:View Definition dialog box
· 9. Select the Show in Menu check box, and then click OK to
close the View Definition dialog box. The new view appears
and should be selected in the More Views dialog box.
TAKE NOTE*
When you select the Show in Menu check box, Microsoft

17. Project adds the new view to the View bar. This custom view
will be saved with this Microsoft Project data file. You have the
option to save all custom items in the Global.MPT (the global
template) file, so they are available each time you use Project.
· 10. Click Apply. Microsoft Project applies the new view. Your
screen should look similar to Figure 8-20.
· .
Figure 8-20:Custom view with Music Video Schedule Table and
Unfinished Shoots filter
· 11.SAVE the project schedule. CLOSE the project schedule.
PAUSE. If you are continuing to the next lesson, keep Project
open. If not continuing to additional lessons, CLOSE Project.
In this exercise, you created a custom view that enabled you to
look specifically at information that was of interest to you.
Recall that a view is a window through which you can see the
various elements of a project schedule in a way that is helpful
to the viewing audience. As you saw in this exercise, a view
might contain elements such as tables, groups, or filters. You
can combine these with other elements to create almost limitless
custom views to suit any purpose.
SKILL SUMMARY
IN THIS LESSON YOU LEARNED:
MATRIX SKILL
To format the Gantt Chart
Modify the Gantt Chart using the Bar Styles dialog box
Modify the Gantt Chart using the Gantt Chart Styles
To modify text appearance in a view
Modify the appearance of text in a view
Modify the appearance of a single piece of text
To create custom fields
Create a custom text field
To create and edit tables
Create a custom table
To create custom views
Create a custom view
Knowledge Assessment

18. Matching
Match the term in column 1 to its description in column 2.
Column 1
Column 2
· 1. field
· a. a spreadsheet-like presentation of project data, organized in
vertical columns and horizontal rows
· 2. custom field
· b. the default view in Microsoft Project
· 3. table
· c. the right side of the Gantt Chart view
· 4. Format
· d. the intersection of a row and a column in a table
· 5. Bar Styles
· e. a view that presents information in rows and columns
· 6. view
· f. a ribbon that allows you to add or change the appearance of
a view
· 7. Gantt Chart
· g. another name for field
· 8. cell
· h. a feature that allows the user to create columns for specific
uses
· 9. bar chart
· i. a window through which you can see the various elements of
a project schedule
· 10. sheet
· j. the dialog box that can be used to format the graphical
components of the Gantt Chart view
True / False
Circle T if the statement is true or F if the statement is false.
T
F
· 1. When you make a change to a milestone using the Bar
Styles dialog box, the change applies to all milestones in the
Gantt Chart.

19. T
F
· 2. The custom fields dialog box allows the user to change the
name of a custom field.
T
F
· 3. In Microsoft Project, you can edit predefined tables but you
cannot create new custom tables to suit your needs.
T
F
· 4. The Gantt Chart view can include only the task data without
the bar chart.
T
F
· 5. When you make formatting changes to your project
schedule, the data does not change, just the way it appears.
T
F
· 6. When you add, remove or rearrange columns, or change
column widths, you are changing the table’s definition.
T
F
· 7. You can make almost any custom field part of a calculation
for another custom field.
T
F
· 8. If you format data using the Font dialog box, the changes
apply to only the data you have specifically selected.
T
F
· 9. The Gantt Chart Styles has more formatting choices than
the Bar Styles dialog box.
T
F
· 10. Changing the appearance of data in a view can make it
easier to read and understand project data.

20. Competency Assessment
Project 8-1: Modifying the Don Funk Music Video Gantt Chart
You are reviewing your project schedule with your team.
Several team members make the suggestion that it would be nice
to have the summary tasks stand out a little bit more on the
project schedule. You decide to format the summary tasks in
purple with the task name listed on the right of the bar.
GET READY. Launch Microsoft Project if it is not already
running. OPENDon Funk Music Video 8-1 from the data files
for this lesson.
· 1. Click the Format tab, and then click the Format button in
the Bar Styles group. Select Bar Styles from the dropdown list.
· 2. In the Name column, select Summary.
· 3. In the bottom half of the dialog box, make sure the Bars tab
is selected. Under the Start, Middle, and End labels,
select Purple from the dropdown list in the Color boxes.
· 4. Click the Text tab.
· 5. Click the Right box. Click the down-arrow, and
select Name from the dropdown list.
· 6. Click OK.
· 7. Select the name of Task 27, Pre-Production complete.
· 8. Click the Task tab, and then click the Scroll to Task button.
· 9.SAVE the project schedule as Don Funk Music Video Purple
Summary, and then CLOSE the file.
LEAVE Project open to use in the next exercise.
Project 8-2: Interviewing Schedule Table
You have created a project schedule for interviewing and hiring
a new employee. Now you would like to create a table to
display the information found on an internal interview schedule.
OPENHR Interview and Hire Schedule 8-2 from the data files
for this lesson.
· 1. Click the View tab. In the Task Views group, click
the down-arrow under the Gantt Chart button, and then
click More Views.

21. · 2. Select Task Sheet from the More Views box, and then
click Apply.
· 3. On the ribbon, in the Data group, click Tables and then
click More Tables.
· 4. Confirm that the Task button is selected as the Tables
option. Select Entry, and then click the Copy button.
· 5. In the Name box, key Interview Schedule Table. Select
the Show in Menu check box.
· 6. In the Field Name column, select each of the following
names and then click Delete Row after selecting each field
name.
Indicators
Finish
Predecessors
Resource Names
· 7. In the Date format box, select 1/28/09 12:33 pm.
· 8. Click OK.
· 9. Make sure that Interview Schedule Table is selected in the
More Tables dialog box, and then click Apply.
· 10.SAVE the project schedule as HR Interview Schedule
Table, and then CLOSE the file.
LEAVE Project open to use in the next exercise.
Proficiency Assessment
Project 8-3: Office Remodel Contractor Tasks
You have developed a project schedule for a kitchen/lunchroom
remodel at your business. You are preparing to distribute the
schedule to some of the contractors who will work on the
project. You would like to call attention to the summary tasks
and the specific tasks that these contractors will be undertaking.
OPENOffice Remodel 8-3 from the data files for this lesson.
· 1. Change the view to the Task Sheet.
· 2. Select Text Styles from the Format ribbon.
· 3. Select Summary Tasks as the item to change.
· 4. Select font size 12 and color Blue. Click OK.
· 5. Select tasks 9 through 14.

22. · 6. Activate the Font dialog box from the Task ribbon.
· 7. Select a Background color of Yellow and then click OK.
· 8.SAVE the project schedule as Office Remodel Contractor
Tasks and then CLOSE the file.
LEAVE Project open to use in the next exercise.
Project 8-4: Interviewing Schedule Custom View
You have created an interviewing schedule for hiring a new
employee at your company. You want to create a custom view
for this project schedule that looks at only the summary tasks in
the Interview Schedule format (which you created in Project 8-
2).
OPENHR Interview Schedule 8-4 from the data files for this
lesson.
· 1. From the More Views dialog box, click New to create a new
view.
· 2. Select Single View.
· 3. Name the new view Summary Interview Schedule View.
· 4. Select Task Sheet from the Screen box.
· 5. Select Interview Schedule Table from the Table box.
· 6. Select No Group from the Group box.
· 7. Select Summary Tasks from the Filter box.
· 8. Select the Show in Menu check box.
· 9. Apply the new view.
· 10.SAVE the project schedule as HR Summary Interview
Schedule, and then CLOSE the file.
LEAVE Project open to use in the next exercise.
Mastery Assessment
Project 8-5: Don Funk Music Video
You need to make some additional formatting changes to the
Don Funk Music Video so that the critical path is more visible
for a presentation. You decide to make these changes using the
Gantt Chart Tool.
OPENDon Funk Music Video 8-5 from the data files for this
lesson.

23. · 1. Make a copy of the Gantt Chart view.
· 2. Name the new view Custom Gantt 8-5.
· 3. Apply the custom view you have just created.
· 4. Activate the Gantt Chart Tools – Format ribbon.
· 5. Select a dark blue Gantt bar style for your presentation.
· 6. Select Critical Path as the type of information you want to
display.
· 7.SAVE the project schedule as Don Funk Critical Path, and
then CLOSE the file.
LEAVE Project open to use in the next exercise.
Project 8-6: Setting Up a Home Office – Adding a Custom Field
You need to add some information about new phone company
billing to your Home Office project schedule. You need to use a
custom field in order to capture information about the suppliers
on the project.
OPENHome Office Setup 8-6 from the data files for this lesson.
· 1. Open the Custom Fields dialog box.
· 2. Create a custom text field named Supplier.
· 3. Insert the new field between the Task Name column and the
Duration column.
· 4. Type Local Office Supply Store as the supplier for the
purchases of all computers, business machines (except phone),
office furniture and supplies.
· 5. Type Phone Company as the supplier for the
purchase/ordering of the phone, phone line, and the installation
of the phone and the line.
· 6. Apply your changes.
· 7.SAVE the project schedule as Home Office Custom Field
Info, and then CLOSE the file.
CLOSE Project.
Chapter 5 Industry Analysis
Introduction

24. An industry is a group of firms producing a similar product or
service, such as airplanes, smartphones, fitness club
memberships, or online education. Industries vary along many
dimensions, including size, growth rate, structure, financial
characteristics, and overall attractiveness. The trends affecting
an industry also matter. For example, as the U.S. population
ages, the growth of the fitness center industry is likely to
depend increasingly on its ability to attract and retain people 50
years old and older. Fitness centers that are on top of this trend
and adjust accordingly are likely to outperform those that
aren’t.
This chapter introduces and describes the industry analysis
portion of the business plan. It’s important that this section
focus strictly on a firm’s industry rather than its industry and its
target market simultaneously. A firm’s target market is the
limited portion of an industry that it goes after or tries to appeal
to at a certain point in time. Most firms do not try to service
their entire industry. Instead, they focus on serving a
specialized portion of the market well. Prime Adult Fitness’s
target market within the fitness industry are people 50 years old
and older.
Separating the analysis of a firm’s industry and its target market
is important because it’s premature for a new firm to select, or
even talk about, a specific target market until an understanding
of the broader industry is obtained. For example, if you were
interested in starting a company to produce a new type of
pesticide for orange trees, your target market would be orange
growers. But before you make the decision to pursue that
market, you should understand the pesticide industry in general.
Is the industry large or small? Is it growing or shrinking? Is it
dominated by large firms or small firms? Are firms in the
industry making or losing money? What impact is organic
farming or new environmental regulations having on pesticide
sales? The answers to these and similar questions will determine
whether the pesticide industry in general is an attractive
industry to enter, and which segments within the industry offer

25. the most promise. Your analysis will also give you a read on
whether starting a firm to target orange growers is a good idea
or whether other segments within the pesticide industry have
greater potential.
The industry analysis should appear early in a business plan
because it logically precedes the analysis of a firm’s target
market and marketing strategy. It also helps set up and support
the remainder of the plan. The analysis normally includes, for
example, an indication of the average growth in sales for the
firms in an industry. This information helps a firm construct its
own financial forecasts and justify its numbers. Similarly, the
other major portions of a firm’s plan, such as product selection,
target market, and operations plan, are guided by the industry’s
characteristics and trends. For example, the increase in the
number of home care businesses is tied directly to factors and
trends in the broader health care market. Home care providers
service patients who need periodic nursing care or treatments
and can (and prefer) to receive this support in their homes
rather than more expensive hospitals or skilled nursing
facilities. The factors and trends spurring growth in the home
care industry include the following:1
· The aging of the population, which is steadily increasing the
number of people who need home care services
· The unfortunate prevalence of chronic disease, such as
Alzheimer’s, cancer, and diabetes, which in many cases requires
consistent treatments
· Growing physician acceptance of home care as an alternative
to placing patients in hospitals or skilled nursing facilities
· The affordability of home health care in comparison to other
options, particularly inpatient hospital care
· Increasing preference among people who need consistent
medical care to be treated in their homes rather than in a
hospital or other facility
· Changes in family structures, which affects the availability of
people to care for family members and subsequently impact the
need for outside help

26. Together, these factors and trends point directly toward
opportunities for additional startups to enter the home health
care industry and provide differentiated services. For example,
Florence Night and Day (www.florencenightandday.com), which
operates in Oklahoma, is not only a home care provider but also
provides related services such as help with activities of daily
living, medication reminders, safety monitoring, and
transportation to doctor’s appointments.
Now let’s look at the first major section in an industry analysis
and why it’s important.
Industry Definition
The first section of the industry analysis should briefly (no
more than several sentences long) describe the firm’s industry.
The NAICS code should be provided. The older SIC system was
replaced by the NAICS in 1997, although SIC codes are still
used. The NAICS systems expanded the number of industry
sections from 10 to 20 to reflect the broader number of
industries that have come into existence. For the majority of
business plans, it is sufficient to report the NAICS code. NAICS
is a two- through six-digit hierarchical classification code
system. Each digit in the code is part of a series of
progressively narrower categories. The organization that
supervises NAICS codes hosts a powerful search engine
at www.naics.com, to help businesses identify their NAICS
code. For example, if you type “fitness centers” into the search
box you will find that the NAICS code for the fitness center
industry is 713950.
Although it may seem like identifying a company’s industry is a
simple task, it’s actually a tough call in many instances. A
firm’s industry can be defined narrowly or broadly. For
instance, is Prime Adult Fitness in the fitness center industry or
the recreation industry? Is JetBlue in the airline industry or the
transportation industry? The distinction is important because it
defines the scope of a company’s industry analysis and helps
identify its overall sphere of concern. The most practical
approach for a business plan is to define a company’s industry

27. narrowly and include an analysis of the trends that influence
broader industry categories if necessary. In the illustrations in
this chapter, Prime Adult Fitness defines itself narrowly as part
of the Fitness and Recreational Sports Center Industry (NAICS
713950). In a subsequent part of its industry analysis, it could
have provided an analysis of trends of the broader industry—
Arts, Entertainment, and Recreation (NAICS 71), but it wasn’t
necessary in this instance.
If your firm operates in two or more industries, you should
identify all the industries that it participates in, and recognize
that you will need to conduct an industry analysis for each of
the industries. For example, if a company makes computer
software for doctor’s offices, it should state that it operates in
the computer software industry and the health care industry and
provide an industry analysis for both industries. Some
discretion is allowed regarding the weight placed on the
individual analyses. In some instances, when a firm operates in
more than one industry, it may be appropriate to conduct a full
analysis on the primary industry the firm operates in and an
abbreviated analysis on the other.
The best Internet resources to assist in helping identify
industries, and in completing all sections of the industry
analysis, are IBISWorld, Bizminer, and Mintel. All three of
these resources are available free through most university
library Web sites. They are also highlighted in the Internet
Resources Table in Appendix 2.2 at the end of Chapter 2.
IBISWorld, in particular, provides a 20- to 40-page analysis for
nearly every industry at the five-digit NAICS code level. Each
analysis starts with a very distinct description of the respective
industry, which may be helpful to you in completing this section
of your business plan.
The Prime Adult Fitness industry definition is shown
in Figure 5-1.
Prime Adult Fitness will compete in the “Fitness and
Recreational Sports Centers in the US” industry (NAICS 71394
and SIC 7991). The industry comprises establishments engaged

28. in fitness instruction and facilities management. Well-known
companies in the industry include 24 Hour Fitness, Life Time
Fitness, and Bally Total Fitness. The industry includes fitness
centers and specialized facilities such as tennis centers,
swimming pools, ice and roller rinks, and dance studios. The
largest segment of the industry, fitness centers, represents 65
percent of industry revenues.
Figure 5-1 Industry Definition (Prime Adult Fitness Business
Plan)
Industry Size, Growth Rate, and Sales Projections
This section of the industry analysis briefly discusses the size
(in dollars), the growth rate (in percent), and future sales
projections for the industry or industries your firms will be
entering. It’s important that this section consist of more than
just numbers. Unless you are defining a relatively new industry,
such as the smartphone app industry, the numbers are fairly
easy to find. The key is to make sense of the numbers and
present them in a way that builds the credibility of your
business plan.
There are four general rules of thumb for completing this
section. First, you should always display financial information,
such as industry sales and growth rate, in a multiyear format,
making it easy to spot trends. Reporting a single number, such
as “the women’s clothing store industry generated $42.1 billion
in sales in 2012,”2 is insufficient. In addition to that figure,
your reader wants to know whether industrywide sales are
growing or declining, and the rate of growth or decline. The
best approach is to report three to five years of industrywide
sales and industrywide growth rates. Always provide a citation
for where your information came from.
The second rule of thumb is to display your information
graphically if possible. Guy Kawasaki, the entrepreneur and
investor introduced earlier in the book, has said that one of the
most effective ways to make a business plan stand out is to
include diagrams and graphics.3 There is a risk in overdoing
this, but supplementing the raw data for industrywide sales and

29. sales growth with attractive graphs that visually depict the same
data is an ideal opportunity.
The third rule of thumb is to provide information about your
industry on a regional or local basis if appropriate. You don’t
need to go into detail—an analysis of your target market and
competitors is provided in the next section of the plan, covered
in Chapter 6. Still, in many industries, industrywide sales are
not evenly distributed across the United States. In these
instances, it might be of interest to your readers to know where
the majority of the sales take place and where the largest
increase or decrease in sales is expected.
The final rule of thumb is to avoid the temptation to report only
positive or flattering information about your industry. This
approach not only undermines the credibility of your plan, but it
also is not intellectually honest. The numbers that are reported
should also be viewed in their proper context. Just because an
industry’s numbers aren’t glowing doesn’t mean that good
opportunities aren’t available. Many average industries have
product or service gaps that provide exciting opportunities for
new businesses. If you believe that your company has the
potential to outperform the average companies in its industry,
state your industry’s numbers fairly and honestly, regardless of
how poor they look, and in the “trends” portion of the industry
analysis, start laying the groundwork for why a company like
yours might outperform the industry. You will have the
opportunity in the next section of your business plan to describe
your specific target market and the promise it offers.
The industry size, growth rate, and sales projection portion of
the Prime Adult Fitness industry analysis is shown in Figure 5-
2.
Industry Size
An industry’s size is normally displayed in dollars over a three-
to five-year period, as shown in the Prime Adult Fitness
industry analysis in Figure 5-2. Some business plans also report
the number of firms in their industry. The ideal size of an
industry for a startup is large enough to allow different

30. competitors to serve different segments profitably but small
enough that it isn’t attracting the immediate attention of larger
potential competitors. There are no good rules of thumb or
heuristics for what this size is—it’s strictly a judgment call.
If your industry is broken down into easily identifiable
segments, it may be appropriate to report the share (in
percentage) of each segment. For example, the $42.1 billion
women’s clothing industry is broken down as shown
in Table 5-1.4
IBISWorld provides this information on industries that are
identified by NAICS codes. It’s a judgment call as to whether
this level of detail is appropriate for your plan.
Some plans also report the contribution that a specific industry
makes to its larger industry sector. For example, for Prime
Adult Fitness, the industry it will participate in, Fitness and
Recreational Sports Centers (NAICS 71394), generated 13.7
percent of the sales of its larger industry sector, Arts,
Entertainment, and Recreational Services (NAICS 71).
Industry Growth Rate
An industry’s growth rate should be reported on a percentage
basis, as shown in the Prime Adult Fitness industry analysis
in Figure 5-2. You should provide an interpretation of what the
numbers mean. There are many ways to do this. Some plans
comment on how the industry growth rate compares to similar
industries. Note that in its industry analysis, Prime Adult
Fitness compares the growth rate of its industry, fitness centers,
to three industries that compete for its industry’s dollars—
Athletic and Sporting Goods Manufacturing (which makes home
fitness equipment), Golf Courses and Country Clubs, and
Marinas. The fact that Prime Adult Fitness’s industry is
growing faster than these competing industries is a positive
sign. Although you don’t want to cherry-pick information that
places your industry in a positive light relative to others, you do
want your reader to share your enthusiasm for the industry you
are about to enter. Prime Adult Fitness’s favorable comparison
of its industry to others is an appropriate way of doing that.

31. Graphs
Source for all information: IBISWorld, May, 2013.
Summary
The industry is in the growth phase of its life cycle. Growth is
being driven primarily by an increased awareness of the
importance of fitness and exercise. The industry’s biggest
challenge is competing for the leisure time of its customers.
Time-strapped customers are less likely to frequent a fitness
club or other recreational sports centers.
The largest segment of the industry, fitness centers, is growing
at a more rapid rate than the industry as a whole. According to
IBISWorld (May 2013), fitness center memberships have risen
from 46.4 million in 2003 to more than 52.6 million in 2013, a
13 percent increase. Although the industry is not recession
proof, it has remained remarkably resilient through economic
swings. As a result of both the psychological and health benefits
that result from exercise, many people now view membership in
a fitness center to be a necessity rather than a discretionary
good.
The Fitness and Recreational Sports Centers industry is growing
at a faster rate than three industries that compete for its
customer’s dollars—Sporting and Athletic Goods Manufacturing
(which makes home fitness equipment), Golf Course and
Country Clubs, and Marinas.
Figure 5-2 Industry Size, Growth Rate, and Sales Projections
(Prime Adult Fitness Business Plan)
Table 5-1 Women’s Clothing Store Industry Breakdown
Segment
Percent of Sales
Tops (including t-shirts, shirts, blouses, and sweaters)
32.0%
Pants, jeans, shorts, and skirts
24.0%
Dresses

32. 18.0%
Coats, jackets, and suits
17.0%
Sports apparel (including swimwear, sweat tops, etc.)
6.0%
Other apparel
3.0%
If you are defining an industry, such as smartphone apps, that
isn’t being actively tracked by a reliable source (e.g.,
IBISWorld), finding good sales data requires creativity and
persistence. It normally involves searching for newspaper or
magazine articles that report the industry’s sales and sales
growth or finding an industry trade association that tracks and
reports the numbers. Mintel, one of the databases mentioned
earlier, in an appendix to each of its industry analyses, provides
the names, phone numbers, and Web site addresses of the major
trade associations related to a particular industry. If you define
a new industry you could search the industry analyses of related
industries that Mintel follows to try to find a trade association
that might track smartphone app sales as part of its larger
mission. You could then call or e-mail the trade association to
ask if it tracks smartphone app sales or to ask where to find the
information.
A fuller list of suggestions for how to track down sales and
sales–growth data for a newly defined industry, such as the
smartphone apps industry, is provided in the Business Plan
Insights box.
Industry Sales Projections
This section should report future sales projections for your
industry. If you are reporting on an established industry,
IBISWorld and similar sources report their predictions. You can
quote from these reports, but you should do so sparingly. Most
of the readers of your plan are more interested in what you
think than in what IBISWorld thinks. As indicated earlier in the
book, a business plan not only lays out facts, but it also
demonstrates to your reader how you think and interpret data.

33. Business Plan Insights Finding Industry Sales Data by Knocking
On Doors
If you’re defining a new industry, such as smartphone apps, one
challenge you’ll encounter is finding good sales data and sales–
growth information. In these cases, finding the information
becomes somewhat of a scavenger hunt. And like in a scavenger
hunt, a willingness to knock on doors and dogged determination
make a big difference.
Here are some suggestions of the doors you might
metaphorically knock on to get sales data and sales–growth
information for the smartphone app industry. Your industry
might be much different from the smartphone app industry, but
the types of resources included in this list represent a good
place to start:
· Type “smartphone app industry” into the Google or Bing
search bar to see if the information has already been compiled
by a reliable source.
· Try to determine if there is a trade association or an annual
trade show for smartphone apps, and contact the relevant
organization to ask if industrywide sales data are available. You
might narrow your search to see if there are trade shows or
conferences that focus on specific types of apps, although the
information you glean at these conferences may be more
limiting. There may be trade shows based on the platform that
the app is hosted on (i.e., iPhone, Android, RIM’s Blackberry)
or the type of app (i.e., productivity, games and entertainment,
music).
· Search for newspaper and magazine articles on smartphone
apps using public search engines such as Find Articles () and
MagPortal (www.magportal.com) and more powerful search
engines such as ProQuest and LexisNexis, which are normally
available through a university library Web site.
· Search industry-specific trade magazines. For example, an
obvious place to look for articles about smartphone apps is
in MacWorld, a magazine dedicated to covering the entire Apple
Inc. ecosystem. If you can’t find an article,

34. contact MacWorld, and ask if they have run an article on
smartphone apps industry sales.
· Contact a company in the industry to ask for leads on finding
industrywide sales data information. Don’t be bashful. [x]cube
Labs is a company that offers complete end-to-end services for
mobile applications development across all major platforms,
including Apple iPhone, RIM’s Blackberry, Google’s Android,
as well as Microsoft’s Windows Mobile. The company lists the
phone number of its corporate headquarters on its Web site.
One thing you’ll need to be careful about is discerning the
credibility of your sources of information. Don’t be afraid,
however, to cite personal conversations if the information is
credible. For instance, it’s perfectly appropriate to cite a
personal conversation with the director of a trade association if
you feel reasonably confident the information you’re being
provided is credible.
You should include concrete numbers for what you think your
industry’s sales and sales growth rate will be for the next one to
three years. If you project the numbers yourself, explain how
you arrived at your estimates. A sensible approach, which works
in most instances, is to simply extrapolate from the historic
trend data you have available. In all cases, you should comment
on what the predictions mean. If you are predicting a sharper
increase in sales than would be expected by looking at historic
trends, you should provide a rationale for your prediction. In
most instances, you will point to improving industry trends as
part of your justification for higher numbers. Briefly mention
the key improving trends here, but do not elaborate. The third
section of your industry analysis deals exclusively with industry
trends.
Industry Characteristics
This section talks about the structure of your industry and lays
out its competitive landscape. The four key issues to deal with
are industry structure, the nature of the participants in an
industry, key ratios, and the industry’s key success factors.
Although you could comment on much more, it’s simply

35. impossible to include all the potential topics within the context
of a 25- to 35-page business plan. Part of the art of writing a
business plan is determining what to include and what to leave
out. You will experience the frustration of having to leave out
potentially important information as you write this section of
your industry analysis.
The industry characteristics portion of the Prime Adult Fitness
industry analysis is shown in Figure 5-3.
Industry Structure
This topic is particularly important. An industry’s size and its
growth rate, regardless of how positive they are, are basically
moot points if an industry isn’t structurally attractive for a
startup. Industry structure, in the context of a business plan,
refers to how concentrated or fragmented the industry is and
whether the industry’s competitive landscape is in general
attractive or unattractive.
In regard to industry concentration, you should report how
concentrated or fragmented your industry is. Concentrated
industries are dominated by a few large firms, whereas
fragmented industries include a large number of smaller
companies. Normally, an industry is concentrated if large
capital requirements are necessary to participate, or it has
matured and a substantial amount of consolidation has taken
place. An industry is typically fragmented if it’s in the
emergence stage of its life cycle and/or the cost of entry is
relatively low. If you’re launching into a fragmented industry,
nothing more typically needs to be said—most startups launch
into fragmented markets. If you’re launching into a
concentrated market, you’ll need to provide a clear rationale in
the next section of the plan (which focuses on your target
market) of how you plan to compete. Some startups are able to
launch into concentrated industries by finding target or niche
markets that are less expensive to compete in or by lowering the
overall capital requirements necessary to enter the industry
through some innovative means. For example, many
microbreweries have successfully entered the highly

36. concentrated brewery industry by brewing their beer locally and
relying on a local niche market clientele. Although this
approach limits the nationwide potential of the microbrewery, at
least initially, it lowers the costs of branding and distribution.
Similarly, some companies are able to lower the capital
requirements of entering an industry on a broader scale through
innovative approaches.
Industry Structure
The industry is fragmented with no one company holding a
market share of more than 5.0 percent. There are many small
fitness centers, dance studios, gymnasiums, ice skating rinks,
and similar facilities that decrease industry concentration.
Barriers to entry are high at the high end of the market (full-
service fitness centers) due to the high cost of real estate and
equipment and low at the lower end of the market (smaller
fitness clubs and dance studios) due to the plentiful nature of
rental space available in strip malls.
Other structural characteristics of the industry include the
following:
· Growing Preference for Easily Accessible, Smaller Fitness
Centers. The market share of small fitness centers, such as 24
Hour Fitness, Snap Fitness, and Curves International, is
increasing. These tightly focused centers serve a specific
clientele and feature smaller facilities with fewer amenities in
exchange for lower membership fees and the ability to locate
near their customers.
· The Aging of the Population. Approximately 25 percent of
fitness club members are 55 years old or older, as are 25 percent
of all Americans. It is estimated that the present 55 year and
older population will maintain a more active lifestyle and focus
more on appearance and general well-being than previous
generations. Older people also have more discretionary income,
free time, and incentive to engage in preventative practices like
fitness to avoid health problems than younger people. As a
result of these factors, it is expected that the percentage of
fitness club members who are 55 and over will continue to

37. increase.
· Competition. Competition throughout the industry is strong.
For-profit fitness and recreational centers must compete against
centers that are nonprofit, such as the YMCA, and “substitute”
fitness facilities such as those provided free or for a nominal
fee by businesses for their employees and apartment buildings
and condominium complexes for their tenants or owners. An
increasing number of hotels and motels feature fitness centers
that satisfy the needs of people who travel frequently.
· Cost and Site Selection. The best sites for full-service, high-
end fitness centers are in densely populated suburban areas with
an affluent population. This fact represents a challenge because
these areas also have the highest real estate prices. Site
selection is easier at the lower end of the market, where fitness
centers such as 24 Hour Fitness and Curves International locate
primarily in rented facilities in strip malls.
· Increases in Premium Services. The industry is benefiting
from an increase in premium services, which are billed
separately from a member’s monthly membership fee. Examples
of premium services include massage, acupuncture, access to a
personal trainer, and childcare.
Nature of Participants
Firms in the Industry. The industry comprises a wide variety of
participants, ranging from large, full-service fitness centers run
by large chains to small, single-employee dance studios and ice
skating rinks. No single firm captures more than 5 percent of
industry sales. The largest firm in the industry is 24 Hour
Fitness Worldwide (4.9 percent), followed by Life Time Fitness
(4.1 percent), Bally Total Fitness (3.2), and Town Sports
International (1.9 percent).
Segmentation. The most common way to segment the industry is
by product/service as shown below.
Clientele. The clientele of the industry is segmented as follows.
Age
Share of Market

38. 6–11 years old
4%
12–17 years old
8%
18–34 years old
35%
35–54 years old
33%
55 years and older
20%
Source: IBIS World, 2013
Key Ratios
To gain as vivid a picture of the industry as possible, the
following ratios were obtained from the sources cited.
Operating and Financial Ratios
2013
2014 (Projected)
IVA/Revenue
50.7%
$50.6
Revenue/Employee
$45,200
$45,500
Wages/Revenue
30.7%
31.3%
Employees/Establishment
17.1
17.1
Wages/Employee (many employees work part-time)
$13,886
$14,205
Industrial Value Added (IVA) The market value of goods and
services produced by the industry minus the costs of goods and
services used in production. IVA is also described as the

39. industry’s contribution to GDP, or profit plus wages and
depreciation.
Source: IBIS World, May 2013
Cost Structure Ratios (For Major Cost Categories)
Item
Percent of Cost
Wages
30.7%
Purchases
20.0%
Depreciation and other costs
7.5%
Rent and utilities
12.0%
Advertising
10.0%
Source: IBISWorld, May 2013.
Key Success Factors
The key success factors for the industry are as follows:
· Easy Access for Clients. A convenient location with easy
access and plenty of parking is helpful.
· Effective Product Promotion. An effective promotional
strategy increases awareness and attracts greater membership
and local patronage.
· Employees with Good Technical Knowledge. Skilled
employees who can demonstrate the use of various types of
equipment, assist participants, and answer exercise-related
questions are important for maintaining good member relations.
· Right Mix of Equipment, Classes, and Activities. Because
fitness and recreational centers must compete for their
customer’s time, and because an increasing number of fitness
centers are targeting a specific clientele, it is important to
carefully match the equipment, classes, and activities to the
target clientele.
· Member Retention. The average attrition rate for fitness
centers in the United States is approximately 37 percent. This

40. means that 37 out of 100 people will cancel their memberships
each year. The cost of recruiting new members is more than
twice the cost of retaining an existing member. Fitness centers
that are able to retain a higher percentage of their members have
a competitive advantage.
· Business Expertise of Operators. The long-term success of a
firm in the fitness industry ultimately depends on the skills of
the operator in running the business profitably over time. This
requires business-related skills along with traditional fitness-
related skills and abilities.
Figure 5-3 Industry Characteristics (Prime Adult Fitness
Business Plan)
The second topic regarding industry structure is the general
attractiveness (or lack of attractiveness) of an industry’s
competitive landscape. A structurally attractive industry,
according to Harvard professor Michael Porter’s “five forces”
model, should have relatively high barriers of entry to keep
competitors out, not enough rivalry to create cutthroat
competition, no good substitutes for the basic product or service
the industry sells, limited power of suppliers to negotiate input
prices up, and limited power of buyers to force selling prices
down.5 You normally won’t comment on each of these points in
a brief industry analysis, but you should allude to the most
salient ones.* For example, if you’re entering an industry with
high barriers to entry, that’s good; high barriers to entry deter
competitors, so you should highlight that aspect of your
industry in this section of your industry analysis. Of course, if
the entry barriers are high, you’ll have to explain, not here but
in the next section of the plan that deals with your target
market, how you’re able to enter.
* If you’re unfamiliar with Michael Porter’s five-forces model,
you should familiarize yourself with the model and what it
means while writing this portion of your industry analysis. A
description of the model is provided in any strategic
management textbook.
Nature of Participants

41. The next section of this portion of your business plan deals with
the nature of the participants in an industry. Your reader will
already know whether the industry is consolidated or
fragmented. In this brief description, you want to provide your
reader with a “feel” for the nature and mixture of firms in your
industry. Who are the major players in the industry? What
percentage of market share do they control? Are the major
competitors online firms or traditional firms? You also want
your reader to visualize how your firm will fit in or see the gap
that your firm will fill. Although the industry analysis does not
talk about your firm per se, the reader knows what your
company is by reading the previous sections of the plan. Draw a
mental map for your reader that shows exactly where your firm
will fit into the industry.
You should also discuss how the industry is segmented. This
discussion can get fairly complex because industries can be
segmented in different ways. For example, the computer
industry can be segmented by product type (i.e., mainframes and
workstations, servers, PCs, laptops, tablets, and handheld
computers) or by customer segments served (i.e., individuals,
businesses, schools, and government). Similarly, you can
segment the smartphone app industry by target customers (i.e.,
parents, business travelers, fashion enthusiasts, music lovers,
sports fans, news and magazine readers, casual gamers, social
influencers, etc.) or by platform they run on (i.e., Apple iPhone,
RIM’s Blackberry, Google’s Android, or Microsoft’s Window’s
Mobile). The best approach is to segment your industry by your
point of entry. So if you’re starting a company to sell specially
designed computers for elementary schools, it would make the
most sense to segment the computer industry by customers
served, as shown previously. As you discuss the different
segments of your industry, if you know which segment is
growing the fastest and/or is the most profitable, that’s good
information to convey. There are also industries that have
clearly bifurcated, with the most successful companies serving
either the top end of the market (in terms of quality of goods

42. and price range) or the bottom end. This trend is seen in
industries such as grocery stores, where most of the money is
being made by high-end stores such as Whole-Food Markets and
Trader Joe’s and low-end providers such as Wal-Mart and
Costco.6 The worst place to be, in bifurcated industries, is right
in the middle. Again, if you’re able to identify the most
promising areas of an industry, or the areas to avoid, that
information should be reported.
Ratios
It’s important to report an industry’s key financial ratios and
other ratios of interest. This information provides not only
further insight into the structure and attractiveness of an
industry but also a point of reference to compare a company’s
financial and nonfinancial projections against. For example, if a
company reports in its industry analysis that the average firm in
its industry earns a 6 percent net profit, and in later parts of the
plan indicates that it will earn 12 percent for its first three
years, the firm will need to explain how it plans to generate
over twice the net income of the average firm. Similar
comparisons can be made with the other numbers.
Key Success Factors
Key success factors in every industry define what an
organization in the industry has to be good at to be successful.
Most industries have 6 to 10 key factors. Most of the successful
firms in an industry are competent in all of their industry’s key
success factors, and they try to differentiate themselves by
excelling in two or three areas.
You should identify the key success factors for your industry
and report them in the industry analysis. If they aren’t readily
apparent, reading through IBISWorld and Mintel industry
profiles and looking at industry trade journals and magazines
should reveal them. A technique that some people find helpful
in identifying an industry’s key success factors is to pose the
rhetorical question, “For a company to be successful in this
industry, it must be good at… (list 6 to 10 items)”. The answer
to this question is a good starting point in ascertaining the key

43. success factors for an industry.
The key success factors vary widely by industry—they are not
generic concepts. For example, the key success factors in the
pet store industry are as follows:
· Attractive product presentation
· Staff with a clear knowledge of the pet industry
· High-traffic and high-visibility location
· Effective quality control (pet services must be up to standard
for specific types of animals and breeds)
· Offer for sale a range of the most popular pets and pet
supplies at different levels of price and quality
As you can see, this list is very specific to the pet store
industry. A different industry would have a much different list.
Knowing the key success factors for an industry is important
because any firm in an industry can be judged by the degree to
which it covers its bases on each factor and excels (or has plans
in place to excel) at one or more factors.
Industry Trends
The final portion of an industry analysis deals with industry
trends. This is arguably the most important section of an
industry analysis because it often lays the foundation for a new
business idea in an industry (i.e., older people are becoming
increasingly interested in fitness—thus, maybe a fitness club
just for adults makes sense), and it typically provides the
justification for claims made earlier in the industry analysis,
such as why industrywide sales should be expected to continue
to increase or decrease.
The two types of trends that are the most important to focus on
are environmental trends and business trends. The best place to
look for trend information is industry trade journals, industry-
specific magazines, industry reports from resources such as
IBISWorld and Bizminer, and through talking to industry
participants. The Internet Resource Table in Appendix 2.2 at the
end of Chapter 2 provides Web site addresses that are helpful in
identifying the sources of this information. Many industries also
have trade associations that keep their members abreast of

44. current trends affecting their industry. For example, the
International Health, Racquet and Sportsclub Association’s Web
site (www.ihrsa.org) has a feature called “This Week in the
Fitness Industry.” The feature provides fresh material each
week about trends and innovations affecting the fitness
industry.
The industry trends portion of the Prime Adult Fitness industry
analysis is provided in Figure 5-4.
Environmental Trends
As discussed in Chapter 2, environmental trends are very
important. The strength of an industry often surges or wanes not
so much because of the management skills of the firms in an
industry, but because environmental trends shift in favor of or
against the products or services sold by the firms in the
industry.
The most important environmental trends are economic trends,
social trends, technological advances, and political and
regulatory changes. You should think through each area to
determine if there are trends that are positively or negatively
affecting your industry that should be commented on. For
example, any industry that relies on the consumption of fossil
fuels, such as the trucking industry and the airline industry, is
being adversely affected by high fuel prices. In contrast, any
industry that provides products or services to older people, such
as health care and travel, stands to benefit by the aging of the
population. Sometimes there are multiple environmental
changes at work that set the stage for an industry’s future. This
point is illustrated in the following excerpt from IBISWorld’s
assessment of the future of the Musical Instruments and Supply
Stores (industry) in the United States.
Continued improvements in the economy will boost consumer
spending, which will further encourage customers to increase
their spending on discretionary goods, such as musical
instruments. However, the industry will continue to face
challenges from large, discount retailers and online. This
external competition will remain a tough threat to overcome

45. because these stores will continue to provide comparable goods
at discounted prices. Furthermore, decreased leisure time
availability and the increasing popularity of alternative
activities will limit demand.7
There are a number of environmental and business trends
affecting the growth and attractiveness of the fitness and
recreational sports center industry. They are as follows.
Trends That Favor the Industry
· Americans are increasingly aware of the need for exercise,
weight control, good nutrition, and a healthy lifestyle among
both adults and children.
· Nationwide economic conditions are stabilizing, which boosts
consumer confidence and makes it easier for industry
participants to raise money.
· An increased emphasis on wellness is evident across many
sectors of society. In particular, positive press about the
benefits of yoga, pilates, and similar activities cause people to
seek out businesses to offer those services.
· The increasing costs of other sports and recreational activities,
such as golf and boating, can result in people opting out of
those activities in favor of joining a fitness club or other
recreational sports center.
· Increasing health costs are motivating corporations to invest
in corporate wellness programs. Many corporations now offer
fitness club memberships as a benefit.
· A growing number of parents are purchasing fitness club
memberships for their children. The increase is motivated by
concerns surrounding childhood obesity and the reduction of
physical education programs in schools.
Trends Working Against the Industry
· Leisure time is becoming less available. Time-strapped
consumers find it harder to make time to frequent a fitness
center.
· Increasing prices for gasoline and health care are lowering
consumers’ disposable income.
· Americans are becoming more obese, with 35.9 percent of

46. people 20 years old or older considered overweight. Many of
these individuals may not see themselves as fit enough to work
out.
· An increasing number of “substitutes” for traditional fitness
centers are becoming available, from businesses that feature
fitness facilities on-site for their employees to apartment
complexes that provide fitness facilities to their tenants as an
amenity.
· Member attrition remains high at 37 percent per year on
average. The cost of recruiting a new member is more than
twice the cost of retaining an existing one.
Figure 5-4 Industry Trends (Prime Adult Fitness Business Plan)
This short statement illustrates the degree to which
environmental change can affect one industry. Similar forces
are at work in all industries, which should be discerned and
reported in your industry analysis.
Some industries experience slow or no growth for years and
then start to come back as savvy industry incumbents and new
entrants realize that environmental change has turned in their
favor. An example is the mattress industry. During the 2007–
2012 time period the industry declined in overall sales. During
the next five years the industry is expected to steadily increase
its sales. A number of significant environmental trends are now
working in favor of the mattress industry:
· The recovering housing market is expected to encourage home
sales over the next five years. As homeowners move into their
new homes demand for mattresses will rise.
· Americans are expected to increase their travel resulting in
hotel and motel expansion. New motel and hotel construction
will spur mattress sales.
· An increased interest in wellness has created a market for
mattresses that improve sleep quality and provide better back
support.
· Increasing disposable income will boost demand for furniture
and household items, including mattresses.
· An expansion in the number of assisted living centers, nursing

47. homes, and skilled nursing facilities will spur demand for high-
end mattresses with enhancements that allow them to be
electronically adjusted.8
If you spend a few minutes browsing the Web sites of two of the
largest mattress manufacturers, Sleep Number
(www.sleepnumber.com) and Tempur-Pedic
(www.temperpedic.com), you’ll see that they’re tapping into
these exact trends. The types of trends depicted in the preceding
bullet points are the types of trends that you’ll want to discern
for your industry. An awareness of these trends can help
startups develop more impressive industry analyses and
potentially more successful business plans.
Business Trends
Other trends impact industries that aren’t environmental trends
per se but are important to mention. For example, are profit
margins in the industry increasing or falling? Is innovation
accelerating or waning? Are input costs going up or down? Are
new markets for the industry’s staple products opening up, or
are existing markets being shut down by competing industries?
You can’t cover every possible fact affecting an industry, but
you should mention the major trends.
Long-Term Prospects
The industry analysis should conclude with a brief statement of
your beliefs regarding the long-term prospects for the industry.
No new information should be provided at this point. Instead,
draw from the preceding sections of the industry analysis to
support your conclusions. Your conclusions should be precise
and to the point. No more than several sentences are required.
When you read through reports on your industry, from
IBISWorld, Mintel, and Bizminer, the reports will include their
assessments of the future prospects of the industry. Resist
simply repeating what others are saying. Your assessment of the
long-term prospects for your industry should reflect your
thoughts and beliefs, and should be fully consistent with the
information contained in the preceding sections of your industry
analysis.

48. The Long-Term Prospects section for the Prime Adult Fitness
industry analysis is shown in Figure 5-5.
The industry is likely to maintain its current trajectory. An
increasing interest in fitness and the popularity of smaller,
tightly focused fitness centers like 24 Hour Fitness and Snap
Fitness is expected to continue to spur industry growth. The
aging of the population is a long-term positive trend for the
industry. Older people are becoming increasingly interested in
fitness and have more money and spare time to devote to a
fitness center. The nature of the industry is likely to change as a
result of this development. Recreational centers that feature
vigorous exercise, such as racquetball and tennis clubs, are
likely to suffer, where fitness centers that offer specialized
classes and equipment for older people are likely to benefit.
Operating margins, which are generally between 7.0 percent and
10 percent, are likely to remain solid for well-managed centers.
A bright spot for the industry moving forward is the growing
prevalence of premium services. A number of fitness centers are
now offering massage, acupuncture, nutritional counseling,
access to personal trainers, and other personalized services.
These services are billed separately from a member’s normal
membership dues, and have the potential to increase overall
operating margins.
Figure 5-5 Long-Term Prospects (Prime Adult Fitness Business
Plan)
How the Industry Analysis Affects and is Affected by
Other Sections of the Plan
Industry analysis is a foundational aspect of evaluating the
merits of a prospective business venture. The industry that a
company participates in, as a result of its structural
characteristics, historical conditions, and current trends,
basically defines the playing field that a firm will participate in.
A careful analysis of a firm’s industry also lays out what is
realistically possible and what isn’t realistically possible for a
startup to achieve. There are some firms, like Dell in the
computer industry and Starbucks in the specialty restaurant

49. industry, which basically turned their industries upside down by
introducing new business models and outperforming their
industries on most if not all metrics. However, these firms are
the rare exception rather than the rule. Most startups are
constrained enough by their industries that their performance
falls in line with what you would expect after reading their
industry analysis.
The industry analysis affects the other sections of the business
plan in that it provides a point of reference to work from. Savvy
business plan writers find themselves referring back to their
industry analysis frequently when writing other parts of their
plan. The analysis is an anchor that describes how the average
firms in an industry are doing and what the overall trends are,
and most business plan writers benefit by constantly comparing
their plan against this anchor. It also helps temper the
enthusiasm of business plan writers and provides a useful
reference for a plan’s readers. For example, if a startup
projected a growth in sales of 17 percent per year for its first
five years, and its industry is only growing at 5 percent per
year, an obvious incongruity exists. A savvy reader will think,
“Isn’t the industry only growing at 5 percent per year? How is
17 percent possible?” There may be an explanation, but the
incongruity between the industry’s sales and the startup’s
projected sales must be explained in the plan.
Chapter Summary
1. An industry is a group of firms producing a similar product
or service, such as airplanes, music, electronic games, or fitness
club memberships.
2. Separating the analysis of a firm’s industry and its target
market is important because it’s premature for a new firm to
select, or even talk about, a specific target market until an
understanding of the broader industry is obtained.
3. It’s important that the industry analysis appear early in a
business plan because it logically precedes the analysis of a
firm’s target market and its marketing strategy. It also helps set
up and support the remainder of the plan.

50. 4. The major sections of an industry analysis include industry
definition; industry size, growth, and sales projections; industry
characteristics; industry trends; and long-term prospects.
5. If your firm operates in two or more industries, you should
identify all the industries that it participates in and recognize
that it will be necessary to conduct an industry analysis for each
of the industries. Some discretion is allowed regarding the
weight placed on the individual analyses. In some instances,
when a firm operates in more than one industry, it may be
appropriate to conduct a full analysis on the primary industry
that firm operates in and an abbreviated analysis on the other.
6. The key to the industry size, growth, and sales projections
portion of the analysis is to not just report the numbers. Make
sense of the numbers and present them in a way that builds the
credibility of your business plan.
7. The four key issues to deal with in the industry
characteristics section of the analysis are industry structure, the
nature of the participants in an industry, key ratios, and the
industry’s key success factors.
8. The topic of industry structure is particularly important. An
industry’s size and its growth rate, regardless of how positive
they are, are basically moot points if an industry isn’t
structurally attractive for a startup.
9. The industry trends portion of an industry analysis is
arguably the most important section because it often lays the
foundation for a new business idea in an industry, and it
typically provides the justification for claims made earlier in
the industry analysis.
10. The industry analysis should conclude with a brief statement
of your beliefs regarding the long-term prospects for the
industry.
Review Questions
1. What is an industry? Why is it important to include an
“industry analysis” in a business plan?
2. Why is it important that the industry analysis focus strictly
on a firm’s industry rather than its industry and its target

51. market simultaneously?
3. Why is it important for an industry analysis to appear early in
a business plan?
4. Why is identifying a company’s industry a tough call in many
instances?
5. What should you do if your firm operates in more than one
industry?
6. What are the four general rules of thumb for completing the
industry size, growth, and sales projections portion of the
industry analysis?
7. What topic should be discussed in the “industry structure”
portion of an industry analysis? Why are these topics important?
8. Why is it important to know how an industry is segmented?
9. Why is knowledge of the key success factors in an industry
important? How can an industry’s key success factors be
identified?
10. Why is the industry trends portion of the industry analysis
arguably the most important section of the analysis?
Application Questions
1. You just reviewed a business plan for a company that will
make a fitness app that will allow its users track their exercise
and monitor their fitness in an innovative way. One thing you
noticed is that the plan didn’t include an industry analysis.
When you asked Caleb, the author of the plan, why the industry
analysis was left out, he said, “Are you kidding? My industry is
one of the hottest ones in America. I just read an article that
said Health and Fitness apps are one of the top categories in
both the Apple and the Android App Store. An industry analysis
isn’t necessary.” Do you agree with Caleb? If he said to you,
“Okay, persuade me that an industry analysis is necessary,”
what would you tell him?
2. Cybex International (www.cybex.com) is a company that
makes premium exercise equipment for home and commercial
use. What industry is Cybex in? (Provide an NAICS code.)
Report the industry’s past three years of sales and sales growth,
and make a prediction for its sales and sales growth for the next

52. year. Is the industry fragmented or concentrated? What are the
environmental and business trends working for and against the
industry’s future growth? On a scale of 1–10 (10 is high), how
attractive of an industry is the industry Cybex participates in for
a startup to enter? Explain your answer.
3. Jennifer Carroll, a high school classmate of yours, is thinking
about starting a company to compete with Crafty.com, the
company that makes instructional videos for people who are
interested in learning crafts such as knitting, quilting,
crocheting, and cake decorating. Jennifer is writing a business
plan and is working on the industry analysis. Jennifer’s having
trouble nailing down the exact industry she will be competing in
and is having trouble finding sources of information to help her
discern the environmental trends that are impacting her
industry. If Jennifer asked you for your help, how would you
help her determine the industry her instructional video company
will participate in, and what suggestions would you give her for
finding information on the environmental trends that are
impacting her industry?
4. Brooklyn Salsa (www.bksalsa.com) is a company that has
launched an exciting new line of salsa dips and related products.
Spend a few minutes looking at Brooklyn Salsa’s Web site and
studying its business concept. If the founders of Brooklyn Salsa
had carefully studied the salsa segment of the broader food
industry before coming up with their business idea, what factors
about the salsa segment or the food industry might have led
them to the idea for Brooklyn Salsa?
5. One industry mentioned in the chapter that is fairly “hot” is
the mattress industry. Spend enough time studying the mattress
industry to determine whether it is structurally attractive for
new entrants. Report your conclusions.
Endnotes
1. A. Son, “IBISWorld Industry Report 62161 Home Care
Providers in the US,” IBISWorld, June 2013.
2. N. Panteva, “IBISWorld Industry Report 44812 Women’s
Clothing Stores in the US,” IBISWorld, April, 2013.

53. 3. G. Kawasaki, The Art of the Start (New York: Portfolio,
2004).
4. N. Panteva, “IBISWorld Industry Report 44812 Women’s
Clothing Stores in the US,” IBISWorld, April, 2013.
5. M. Porter, Competitive Strategy: Techniques for Analyzing
Industries and Competitors (New York: Free Press, 1980).
6. M. J. Silverstein, Treasure Hunt (New York: Portfolio, 2006).
7. N. Everett, “IBISWorld Industry Report 45114 Musical
Instrument & Supplies Stores in the US,” February 2013.
8. D. Kelly, “IBISWorld Industry Report 33791 Mattress
Manufacturing in the US,” January 2013.
Chapter 6 Market Analysis
Introduction
The industry analysis section of a business plan is normally
followed by the market analysis. Whereas the industry analysis
focuses on the broad business domain that a firm will
participate in (i.e., airline industry, fitness and recreational
sports industry, women’s clothing industry), the market analysis
breaks the industry into segments and zeroes in on the specific
segment (or target market) that the firm will tackle. As
mentioned in Chapter 5, most firms do not try to service their
entire industry. Instead, they focus on servicing a specific
market within the industry very well.
An important point to recognize at the outset of this chapter is
that the market analysis section of a business plan is distinctly
different from the marketing section. The market analysis
section focuses on describing a firm’s target market, customers,
and competitors; how it will compete in the marketplace; and
potential sales and market share. In contrast, the marketing
section, which is covered in Chapter 7, focuses on the classic
marketing functions that support a firm’s product, including
price, promotion, and distribution (product was covered earlier
in the plan). Although some business plans commingle these
two sections, it’s much more effective to keep them separate.

54. The market analysis is an extremely important section of a
business plan for two reasons. First, like the industry analysis,
the market analysis helps define the nature of the business and
the remainder of the plan. For example, the market analysis
normally includes a forecast of a firm’s sales, which directly
impacts the size of its manufacturing operation, its marketing
plan, the number of people it will need to hire, and the amount
of money it will need. Similarly, the more a startup understands
the needs of its target market, the more it can match its product
attributes to those needs. For instance, in conducting market
analysis, GreatCall (www.jitterbug.com), a company that offers
a smartphone service designed specifically for older people,
found through a survey of smartphone users that the most
important feature for users age 55 and older is just the ability to
make or receive voice calls. As a result, GreatCall’s phones are
simple and easy to use and focus primarily on the ease of
making and receiving calls.1 In contrast, other smartphone
manufacturers target the youth market. Consistent with the
needs of their markets, they produce more stylish phones that
offer advanced feature that are attractive to youths. For
example, the Samsung Galaxy S4, which was a hot phone at the
time this chapter was written (June 2013), offers a feature
called Group Play. With Group Play, you can connect up to
eight phones wirelessly to play games and share your favorite
songs, photos, and documents. This functionality is exactly the
type of feature that young people like, who are accustomed to
interacting with small groups of friends at school and in their
free time.
The second reason a market analysis is important, if done
properly, is that it affirms that a company has a well-thought-
out target market, understands its customers, and can generate
sales in the face of competition. It also communicates the
amount of potential that exists in a firm’s target market. This
latter point is particularly important because the potential of a
firm’s target market should be consistent with its overall goals
and aspirations. If a firm wants to raise investment capital, for

55. example, it must demonstrate that its target market has
sufficient potential to enable it to rapidly increase sales and
return to its investors an amount that is 5 to 20 times the
original investment, which is what equity investors normally
expect. In contrast, if the business plan is for more of a lifestyle
firm, such as a high-end woman’s clothing boutique, and the
goal is to qualify for an SBA guaranteed loan, then the target
market will still need to demonstrate potential but at a level
more commensurate with the type of financing desired.
Because of the stakes involved, a well-developed market
analysis usually takes considerable time and effort to complete
and is scrutinized carefully by discerning readers. The authors
of a business plan must have a complete understanding of their
target market, customers, and competitors; how they will
compete in the marketplace; and their potential sales and market
share. Gaining this degree of insight and knowledge generally
requires entrepreneurs to conduct both primary and secondary
research as they work through the individual sections of the
market analysis.
Now let’s look at the first major section in a market analysis
and why it’s important.
Market Segmentation and Target Market Selection
To succeed, a firm must answer the basic question: “Who are
our customers, and how will we appeal to them?” To determine
the customers, you first segment the industry that the firm will
participate in and then identify the specific target market it will
tackle.
In some cases, a firm will have two markets, and you should
describe the characteristics of both markets. For example, if you
plan to sell your products through a retail store, you have two
markets—the retail stores and the end user of your product. You
can use your judgment regarding how much weight to apply to
each market analysis.
The market segmentation and target market selection portion of
the Prime Adult Fitness market analysis is shown in Figure 6-1.
Market Segmentation

56. For the purpose of the Prime Adult Fitness business plan, the
Gym, Health & Fitness Clubs in the U.S. industry is segmented
by product type as follows:
Product/Service
Share of Industry Sales
Gyms and Fitness Clubs
65.0%
Other
10.0%
Dance Centers
7.0%
Swimming Pools
7.0%
Ice and Roller Rinks
6.0%
Tennis Centers
5.0%
Additional ways to segment the industry include by annual
household income, by gender, and by sector (i.e., for-profit,
not-for-profit, corporate).
Target Market Selection
Prime Adult Fitness will target the health and fitness club
segment of the industry and people 50 years old and older.
(Only people 50 years old or older will be granted membership.)
The following factors led to the decision to select this market:
· Industry analysis. The industry analysis provides compelling
evidence that older Americans are increasingly interested in
fitness, have sufficient leisure time to engage in fitness
activities, and have more disposable income than other age
groups.
· Additional evidence. According to IBIS World’s August 2013
report, the central characteristic of the gym, health and fitness
clubs industry has been the growth of older people who are
joining health clubs. Of the 52.6 million people in the United
States who belong to health clubs, about 20 percent are older
than 55. That percentage represents a 320 percent increase since

57. the early 1990s.
· Older people prefer to exercise with people their own
age. Substantial anecdotal evidence suggests that older people,
in particular, prefer to exercise with people their own age. In
fact, according to a study published in the April 2007 issue of
the Annals of Behavioral Medicine, many older people would
rather exercise alone than in a mixed group that includes
younger people. This statistic causes us to believe there is
tremendous upside potential in terms of the number of older
people who would join a fitness center if there was a center just
for them.
· Current fitness centers are not meetings the needs of older
people. As illustrated in the “Buyer Behavior” section shown
below, all-purpose fitness centers are not able to offer the
environment, programs, or mix of classes that are optimal for
older people. As shown by Curves International and others, a
potentially profitable business model in the fitness industry is
to target a single demographic very well by offering a tailored
environment and mixtures of classes and facilities.
· Insurance subsidies. An increasing number of health insurers
are providing subsidies to Medicare-eligible individuals to join
fitness centers.
Target Market Size
Prime Adult Fitness plans to open a single location in Oviedo,
Florida. Oviedo is a suburb of Orlando. The following steps
were taken to estimate the size of Prime Adult Fitness’s target
market.
Step 1: Determine Prime Adult Fitness’s trade area:
We feel that Seminole County, Florida, the county that Oviedo
is located in, represents a reasonable approximation of Prime
Adult Fitness’s trade area. Most retail outlets obtain the
majority of their business from a 5- to 10-mile radius of their
location because people are not willing to drive farther if a
similar service is available. Because Prime Adult Fitness will
offer a unique service, it may draw from a larger area. The
company’s initial location will not be more than 16 miles from